Serviced apartments – the new opportunity in US property investment

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There are 826,759 serviced apartments around the world (GSAIR), and 61% of them are in the USA (Knight Frank). Over there, they’re often known as ‘extended stay apartments’ and were originally conceived with the business traveller in mind.

The concept of a serviced apartment works in favour of guest and hotelier alike. Consisting of at least one bedroom (often two or three), a bathroom, a living area and a fully-equipped kitchen, guests have a generous space to spread out in and call their own. Hotel owners are able to cut down on overheads and do away with large area, low margin facilities like public lounges, restaurants, kitchens and full-service lobbies.

The resulting cost savings and lower than hotel rates meant the idea took off quickly and the appreciation of a ‘home-from-home’ accommodation option gained momentum, particularly with families and groups.

It also extended the appeal of serviced apartments beyond business travel to the leisure and vacation market. City centres are no longer the sole focus of the serviced apartment sector; families want to go on vacation together to popular destinations, meaning that serviced apartments represent some of the best investment properties in Florida, for example.

The Airbnb phenomenon has transformed travellers’ expectations, and traditional hotel accommodation is less appealing to millennials. Serviced apartments, on the other hand, are finding huge favour; average occupancy has been higher than 74% since 2010, and higher than 75% since 2013.

Even allowing for the fact that supply has increased by 23% since 2013, occupancy rates in the USA have maintained their level at around a healthy 76%. In fact, according to sector analysts The Highland Group, demand has been up by between 5% and 7% per quarter for the last two years.

As a consequence, US serviced apartments have been able to raise their rates faster than hotels; revenue per room has increased for serviced apartments in 2017 but has dropped slightly in hotels.

Nor does the popularity of serviced apartments show any sign of abating; over 27,400 are scheduled to open in America by the end of 2017, and a further 35,000 during 2018 (Lodging Econometrics).

What’s also interesting is that serviced apartments are no longer the exclusive preserve of the big hotel chains like Hilton and Marriott. James Harrington, Business Development Manager at sector specialists Emerging Property explains “Many private investors are unaware that they can actually own an individual serviced apartment in the USA, but in fact they can. What’s vital, though, is to be completely satisfied that the developer has a really good track record in the sector, and that the property will be professionally managed 24/7 by a company with a solid background in resort hospitality. And because overseas property investment can be quite different from here in the UK, it’s important to get expert advice before committing to anything.”

Overseas investors accounted for $153 billion of residential property sales in the USA in the year to March 2017, attracted by the country’s economic opportunities, economic security and political stability. It’s also a great place to visit and stay in your own property.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Serviced apartments – the new opportunity in US property investment | LandlordZONE.

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Repossession of your property for non-mortgage debt?

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An article from Mortgage Strategy which explains that six of the top ten lenders say they use ‘all monies charges’ in residential mortgage documents, letting them repossess homes if borrowers struggle with non-mortgage debts.

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Agent Orgy

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Victoria Whitlock, writing in the London Evening Standard tells of her Landlord friend’s decorator catching the new (unnamed) letting agent holding a ‘party’ at an empty property.

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The landlord has several properties in South London

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Irish Republic calls for MOT style checks for slum landlords

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Overcrowding:

The Government in the Republic of Ireland has said it will examine proposals for an MOT-style test for rented accommodation. This move follows claims of slum landlords allowing extreme overcrowding and providing very dangerous accommodation.

In one case in Dublin overcrowding in a rental had 16 people to a room, 64 tenants in a single property.

Politicians and charities in the Republic are calling on the government to introduce the checks to help clamp down on “slum landlords” who rent out properties well below minimum residential standards.

One charity has said that the current system where, as in the UK, local councils are responsible for checking rented accommodation “is not fit for purpose”.

Dr Aideen Hayden, the chairwoman of the Threshold charity said:

“Local authorities do not have the capacity to inspect and effectively enforce minimum standards,”

“The penalty should be severe so that there is no excuse for being outside the system. Inspections would then focus solely on whether the landlord held a certificate of compliance.”

The current regime, as in the UK, relies on landlords “being caught” but the prospect of this, according to Dr Haden, is slim. Adding that the most dangerous housing in the country was often occupied by the most disadvantaged and vulnerable in society, “There is no fear of the consequences in the absence of regulations and proper inspections”

Responsible landlords in the UK have long campaigned for improved systems of inspection to drive out rogue landlords. These rogues represent a small proportion of the UK landlord market as a whole, but contribute to misery for low income tenants and bad publicity for all landlords out of all proportion to their number.

Interestingly, the situation in Ireland appears to mirror exactly the UK experience: according to landlord bodies, cash strapped local authorities just don’t seem to have the capacity to adequately enforce existing laws on rogue landlords.

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